Question

1/ Has decided to retire at 62yrs and 6 months of age. Starting CPP retirement pension at age 65, he would have received $800/mo. By how much will his CPP pension change by retiring at this age?

2/ Assume OAS has a clawback rate of 15% on income above $78,000. Jagit is presently receiving $600/mo OAS but his yearly income is $90,000, including OAS. How much OAS will be clawed back from Jagit?

Answer 1

Ans. The amount being received at the age of 65 is CAD 800 per month. To get the amount a persion will get if he retires at h age of of 62 years and 6 month will be taken after discounting 800 per month with .6% as according to the law, the amount if taken out before the age of 65 is reduced by .6.% every month.

The total number of months from 62 years and 6 months to 65 is 30 months.

So, for 30 months the person will get CAD 144 less in total (30*.6%*800) or CAD 4.8 per month (800*.6%)

Ans 2. The clawback is done on the net income if the net income is beyond the threshhold. The amount is 15% of the net income or the OAS given, which ever is lower. In this case the option is of 15%The total income for the person is CAD 90,000 including OAS. OAS per month is CAD 600

Per anum is CAD 7200.

Reducing this the net income for the year is CAD 82,800

The amount exceeding the threshold = CAD 4800

The tax levied on this is 15% of CAD 4800 CAD 720

Per month deduction from CAD 600 will be 720/12 = CAD 60

The OAS a person will get CAD 540